Electricity and gas bills: 'elimination of zero-rated sales tax to hamper exports'

Chairman, the Pakistan Tanners Association (PTA) (Central) Agha Saiddain has said that elimination of zero-rated sales tax on electricity and gas bills would hamper the country's exports and urged the Federal Board of Revenue (FBR) to avoid taking such decision.
While talking to Business Recorder here on Tuesday, Agha Saiddain expressed his concern over a news that the facility of zero rate sales tax on electricity and gas bills and asked the FBR authorities to convene a meeting of the stakeholders prior to finalising any decision in this regard which could leave sever impact on the country's exports.
He further said that incentive packages are being announced world over to save the industry from total collapse because of the current global recession. The developed economies have taken the lead while the developing countries are following the footsteps of the USA and the European countries, he said and added the newly elected President of the USA, Barak Hussain Obama has also introduced stimulus of US $787 billion to save the American economy. Pakistan is also facing historical trade deficit of more then $11 billion just in seven months of the current financial year.
The imports have increased to double of the exports that forced the Pakistan government to seek IMF financial assistance, he stressed the need for combating the trade deficit issue by enhancing exports.
He said that the import of raw material used for the export-oriented industries should only be allowed and the government should impose a strict ban on the import luxury items for certain period so as enable the country to get rid of the present economic crisis.
Agha said the government should induce the local industry, particularly, engaged in producing exportable goods and provide level playing field, particularly keeping in view the facilities and incentives being provided by our neighbouring countries. Only increase in exports could help Pakistan to get out of the trade deficit problem, he maintained. The PTA chief, said that a significant decline in the leather exports has been registered which can be evident from the latest statistics.
The leather and leather product exports were dropped by 20.03 percent only in seven month of the current financial year ie July 2008-January 2009 that pushed the local leather industry to the verge of collapse, he maintained. "We have been requesting the government for providing an incentive package for the leather industry, he said, adding that deciding to discontinue zero rating sales tax on electricity and gas bills of the five leading export sectors.
If the FBR takes decision to disallow this facility, it would have severe effect on the export sectors that would also result in further increase in the trade deficit. "At least, the authorities should look into the ground reality and keep their eyes open to see what China, India and Bangladesh have down to save the their export industries, particularly the leather industry, he added.